Friday, October 05, 2007

Those of us who have lived and worked many years overseas are well aware that “cheap labor” can be very expensive. The extra costs lie hidden to the newcomer who might, at first, believe he is getting something for nothing. Learning the rest of the story is what we call “experience.” If you want to make it work, you have to adapt your procedures and your attitude – often to your own discomfort.

With the end of the Cold War, a new world of opportunity opened up for business. With governments loosening the shackles on their economies, the potential for trade and investment greatly expanded. To Western business leaders, the attraction of the newly available labor and resources is a bit like a gold rush: some will score huge profit gains. These particular opportunities, on this scale, are a historical one-off. By all means, let’s profit while it lasts. But not everyone will come out ahead. As in any gold rush some will perish along the way – including customers.

Recent recalls of goods produced overseas by, or for, American companies bring this last point sharply to mind. Those of us with related overseas experience would always have been wary as consumers of such products. Problems can occur in goods designed and produced in America. But such problems are far more common in the Third World.

We certainly benefit from the expansion of trade in any direction. As long as we see clear improvement in process and product quality, and no deterioration of our national strategic interests, then we need not worry much. But we do need to face up to the fact that US governments have, over the decades, raised the cost of doing business in America. Bad policy has pushed production overseas and weakened our industrial and strategic base relative to what it could have been.

Energy prices, for example, have been a worry for many businesses and families. With US energy sources largely tied up by regulation, we are faced here with higher business costs and less-favorable strategic dependence. Instead of facilitating creative uses of abundant coal supplies, we get ethanol subsidies, thereby giving us inferior fuel and higher food prices. Instead of welcoming the extraordinary promise of nuclear-electric power, the industry in the US has been harassed into stagnation while the rest of the world advances and gains experience. Meanwhile, tax-funded research is herded into the latest fool’s errand, a search for man-made global warming.

Heavy medical expenses are another burden dragging down businesses and families. This is another industry held back by excessive regulation, and by the constant threat of predatory litigation. This is not an industry that needs more government money or intervention: it already has too much. The same can, and should, be said about every other industry, including education.

The further America moves away from the attitude of the minimal state and maximum personal responsibility, the less American it seems to become. And the less American it becomes, the less competitive it will be.